This book primarily deals with corporate restructuring through mergers and acquisitions (M&As). It examines all functions that must be performed in completing an M&A transaction. Domestic and cross-border M&As are very similar in many respects even though differences between them also exist. The book also includes discussions of topics of international finance and multinational financial management that inevitably arise in cross-border M&A transactions.
Given the increasing importance of China as a global economic leader as well as Chinese companies’ growing outbound merger and acquisition (M&A) activities, we devote the second volume of the book to China’s outward foreign direct investment and cross-border M&A activities. The case studies regarding Chinese foreign direct investment, both in Greenfield and acquisition forms, give additional insights into challenging tasks of due diligence and postmerger cultural integration that foreign investors face.
Throughout these discussions, we will emphasize on methods, analytical tools, and concepts that have great applications in M&As. This means that we would deliberately avoid broad theoretical discussions that do not have immediate relevance for practical applications, even though knowing them might provide significant theoretical insights into all sundry aspects of merging or acquiring another company or being acquired by another enterprise. Emphasizing on practical applications does not imply that theory is insignificant. On the contrary, we greatly value theory. This approach is based on our belief that business education should emphasize on practical relevancy for the conduct of business and managerial decision making.
Based on this philosophy, we selected those topics because knowledge of which is imperative in M&A decision making. Naturally, a corporate executive cannot implement all tasks that are required to develop a strategy for merger or acquisition. They cannot find a target, conduct due diligence, assess the value the target company, negotiate and structure the deal, and, finally, satisfactorily meet the most challenging phase of an M&A transaction; that is, to integrate the acquiring and acquired companies. Accomplishing those tasks requires many resources and a variety of expertise: consulting companies, law firms that specialize in M&As, and investment banks to perform the tasks. However, the decision maker should have an understanding and a clear overview of all aspects of the processes that a typical merger or acquisition initiative must go through. This book is written as a concise guideline for those readers who are interested in gaining a clear understanding of what a merger or acquisition entails.